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Seattle Bubble Forum Archive • View topic - Live Rent vs. Buy Comparisons

Live Rent vs. Buy Comparisons

Anything and everything relating to Seattle-area real estate.

Moderators: synthetik, The Tim, Lake Hills Renter

Live Rent vs. Buy Comparisons

Postby perfectfire » Wed Sep 10, 2008 10:12 pm

Post properties than are simultaneously for sale and for rent or ones than are for rent and are recently sold.

28105154_2.jpg
28105154_2.jpg (30.85 KiB) Viewed 7081 times


Bellevue, Woodridge neighborhood
2314 127th Ave SE Bellevue, WA




I know this one has been on the market (for sale) for much longer than it says on redfin.
Remember, if you rent it's not a home, it's a hovel.
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Re: Live Rent vs. Buy Comparisons

Postby sniglet » Thu Sep 11, 2008 5:45 am

It would be wonderful to include the estimated monthly cost of ownership in these posts. That makes it easy to compare the monthly rental vs ownership price.
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Re: Live Rent vs. Buy Comparisons

Postby The Tim » Thu Sep 11, 2008 6:31 am

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Re: Live Rent vs. Buy Comparisons

Postby The Tim » Thu Sep 11, 2008 6:47 am

Since I just can't let it go...

.

2 bed, 2.25 bath, 1,325 sqft.
Rent:
For Sale: (+$182/mo HOA)
_____Monthly Cost: $2,153 (32% premium)


3 bed, 2.25 bath, 1,608 sqft. (end unit)
Rent:
3 bed, 2.25 bath, 1,668 sqft.
For Sale: (+$182/mo HOA)
_____Monthly Cost: $2,417 (26% premium)

FWIW, I think their asking rents are unreasonable for the Kenmore area. Other properties for rent around here are going for around $1.10 per square foot. Northshore is asking $1.20+ and there's no shortage of places with openings.
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Re: Live Rent vs. Buy Comparisons

Postby Trina » Thu Sep 11, 2008 6:49 am

Yearly maintenance of 1% purchase price
Home owner's insurance $800 more than renter's insurance per year
Mortgage interest tax benefit is only whatever benefit comes in addition to the standard deduction

Tim.

A few things that I noticed with your comparison.

Yearly maintenace of 1%, of course may vary from year to year. It also depends on the house that someone buys.

Homeowners insurance $800.00 more than renters insurance. I am guessing renter's insurance is somewhere around $30.00 per month based on when I looked into getting renter's insurance last month. Also I pay around $480.00 per year for homeowner's insurance. So considering your $30.00 x 12 = $360.00 for renter's insurance for the year. $480.00 - $360.00 = $120.00 for the difference to insurance prices.

Also the difference in claiming the standard deduction and claiming interest write off is a big difference. Then there is the property tax write off.

I am not sure what the standard deduction as I have exceeded that amount with my other write offs. So if I get $18,000.00 in interest write off and then an additional $4200.00 in property tax write off. Ishould get a large amount back on my taxes. So this amount is pretty significant. Then I also pay down my mortgage each year.

I know that this example is still not inline with your rent vs. buy.

However I just wanted to point out that the the tax benefits should change your $3400.00 payment amount.
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Re: Live Rent vs. Buy Comparisons

Postby WestSideBilly » Thu Sep 11, 2008 7:32 am

You're paying too much for renter's insurance. I pay $11/month for pretty good coverage, and after multi-policy discounts it's close to "free" (the discounts would apply on homeowners insurance as well, so that's a wash). The most I've heard of anyone paying is about $200/yr and that was on a large property with a lot of expensive toys.
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Re: Live Rent vs. Buy Comparisons

Postby Trina » Thu Sep 11, 2008 7:41 am

I would say that you are getting a great deal. However the policy that we were looking was including items that were going to be in storage. Also the policy was going to be in another state.
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Re: Live Rent vs. Buy Comparisons

Postby WestSideBilly » Thu Sep 11, 2008 7:51 am

That sounds like a different type of policy from standard renter's insurance.

FYI, the standard deduction for single people is $5450 for 2008, $10900 for couples. If you're in the 28% tax bracket (make less than $164k, either by yourself filing as single or together filing as married) that $18k tax writeoff results in about $5000 in reduced tax, give or take a bit. Most likely if someone itemizes, they'll get about $7000-8000 - in other words, only marginally more than the std deduction, and less than the std deduction if they're filing as married.

I'm unfamiliar with a property tax credit since we don't pay income tax here. :?: :?: :?:

I'm not saying it's inconsequential, but pointing out that Tim's model is a pretty good one for quick comparisons.
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Re: Live Rent vs. Buy Comparisons

Postby perfectfire » Thu Sep 11, 2008 10:06 am

Remember, if you rent it's not a home, it's a hovel.
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Re: Live Rent vs. Buy Comparisons

Postby Trina » Thu Sep 11, 2008 10:11 am

If the standard deduction is $10K for couples. Then I am writing off, as used in my example, $18K in interest and another $4.5K in property that comes to $22.5K in write offs. Then you can also include all of your work related expenses, some your child care expenses, and any donations that you have made. So take the $22.5K in deductions from the house and then add any additional itemized deductions.

My point is that with the write off for the mortage interest, property taxes and other general deductions that there is quite a tax break for owning a house.

It is not a property tax credit but property taxes that are paid on the property.
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Re: Live Rent vs. Buy Comparisons

Postby Trina » Thu Sep 11, 2008 10:14 am

You own a house but looked into getting renter's insurance? I concur that there's something odd about your renter's insurance quote. I pay only $125/yr. which is close to what WSB pays.


If you read what I wrote I pointed out that this was a policy for a different state.
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Re: Live Rent vs. Buy Comparisons

Postby perfectfire » Thu Sep 11, 2008 10:59 am

Remember, if you rent it's not a home, it's a hovel.
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Re: Live Rent vs. Buy Comparisons

Postby Notabull » Thu Sep 11, 2008 11:11 am

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Re: Live Rent vs. Buy Comparisons

Postby perfectfire » Thu Sep 11, 2008 11:28 am

I left the actual calculations as an excercise for the reader because situations vary widely from person to person plus people tend to be heavily biased (one way or another) when they estimate costs that cannot be exactly determined.
Edit: Also the rent and buy prices are just asking prices for all we know the house would only sell for $100k less or rent for more than asking.

What do people typically use as a rule of thumb when guesstimating the cost of homeowner's insurance?
Remember, if you rent it's not a home, it's a hovel.
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Re: Live Rent vs. Buy Comparisons

Postby Trina » Thu Sep 11, 2008 12:09 pm

If you spent more time thinking and less time being glib you would notice that that doesn't explain why you own a house and are looking for renter's insurance.

I am not going to be flip at this point. But I don't think that any further comment is needed here.
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